Why are most file extensions 3 characters or less?

Question

Most files I see and use end in .something, where the .something is often 3 characters. I know that some file extentions are shorter, like .py or .r, but I have never seen one longer than .exe or .jpg

I know from this FAQ that they can be up to 260 characters including the file's name.

Why is the standard 3 characters?

Answer 1

Because back in the old days of 8-bit micros, when memory and disk space were both hugely more expensive than they are today, most operating systems used a so-called 8.3 file naming system (8 characters for the filename, and 3 for the extension).